S&P Up 3.3%, Reaching New Highs as Communication, Technology, and Financial Sectors Climb
Weekly Update – August 28, 2020
The S&P 500 index gained 3.3% last week, reaching fresh highs and rising for a fifth consecutive week as the communication services, technology and financial sectors led a broad climb.
The market benchmark ended the week at 3,508.01, marking a new closing high that was up from last week’s closing level of 3,397.16. The S&P 500 also reached a fresh intraday record Friday of 3,509.23 and is now up 8.6% for the year to date.
The advance came as investors have been betting on continued strong demand for communication services and technology at a time when the pandemic has many employees and students working remotely. Also boosting sentiment, economic data this week showed orders for durable goods in the US jumped 11% in July, more than double the increase that was expected, while personal consumption spending rose 1.9% in July, surpassing expectations for a 1.5% rise.
Federal Reserve Chairman Jerome Powell unveiled a more flexible approach to inflation targeting, saying the central bank will “seek to achieve inflation that averages 2% over time.” This indicates the central bank would allow periods in which inflation is above 2% to balance out periods when it has been below that level.
Communication services had the largest percentage gain of the week, up 4.6%, followed by a 4.4% increase in technology and a 4.3% rise in financials. Just one sector was in the red for the week: utilities, which edged down 0.6%.
In communication services, gainers included Facebook (FB), Netflix (NFLX) and Alphabet (GOOGL). Facebook’s shares jumped 10% while Netflix shares rose 6.4% and Alphabet shares were up 4.1%. The pandemic has increased demand for the companies’ products and services.
In technology, shares of Salesforce.com (CRM) soared 30.6% as the company posted fiscal Q2 results well above analysts’ expectations. The results were seen as an encouraging sign for enterprise spending.
In the financial sector, regional banks were strong, with KeyCorp (KEY) climbing 6.9% this week while Regions Financial (RF) added 6.7%.
Next week, all eyes will be on the Labor Department’s August jobs report, due Friday. Ahead of that, the market will get readings on manufacturing activity and construction spending Tuesday, followed by factory orders and ADP employment data Wednesday.